There are 2 parts to a Workers Compensation policy. The second, often overlooked part is called Employer’s Liability. Employer’s Liability is what protects the employer in the event that an injured employee seeks compensation beyond medical bills and lost wages.
Let’s say you own an accounting firm. One day, one of your accountants is involved in a terrible calculator accident and loses their left arm (this is obviously hyperbolic, but bear with me). There is an intrinsic value to having an arm. Just having your medical bills taken care of probably won’t satisfy your employee. They will want compensated. The employer’s liability portion of your workers compensation policy is where that compensation will come from.
There are 3 limits provided by Employer’s Liability
- Bodily Injury by Accident each incident– this limit provides the maximum amount of coverage provided for any one accident regardless of the number of employees.
- Bodily Injury by Disease policy limit – this is the aggregate limit that your policy will pay out for any one disease contracted by employees in the course of employment.
- Bodily Injury by Disease each employee– this is the maximum that your policy will pay to any one employee for a disease.
Employer’s Liability can cover a wide range of intangible losses. Consider a husband who can no longer make love to his wife due to an employment related injury. Both the husband and wife suffer a loss and may seek compensation from the employer. Or what about a mother injured at work who can no longer lift her young child. Although intangible, there is certainly compensable damage in this case.
In Pennsylvania, the minimum limit of employer’s liability coverage on a workers compensation policy is $100,000 per accident, $500,000 per disease, and $100,000 per employee by disease. I strongly encourage anyone buying a workers compensation policy to consider higher limits of liability. Think about the two examples above for just a moment and contemplate if you really believe that state required limits would be sufficient. Remember, as with all insurance, if you don’t have enough coverage you will have to pay out of pocket.